Asia/Pacific News
China's Position as a Big Fuel Oil importer No Longer Guaranteed
China exported more fuel oil than it imported in August for the first time since 1999, signalling that the nation will not necessarily offer a market for Asia's excess supplies, Reuters reports.
"China's position as a big importer of fuel oil is no longer guaranteed," said Amrita Sen, chief oil analyst at Energy Aspects.
The country probably flipped back to importing more than it exported in September as refiners replenished their supplies, industry sources said.
"Even with increased refining capacity, (China) might not be ready structurally to become a net exporter," Sen said.
"There could still be months when bunker demand is good."
Lower bunker sales, along with reduced use of fuel oil by small "teapot" refineries, has pushed down demand since the start of the year.
China National Chemical Corp (ChemChina) won the right to import 10 million tonnes of crude oil this year and substituted the crude, which yields higher-value products, for fuel oil it would otherwise have used, and China is considering allowing refiners to import more crude next year.
"This would tighten the Chinese fuel oil deficits and favour higher exports," said Richard Gorry, managing director of JBC Asia.
In the coming years, Gorry said the country might be a net exporter in some months, particularly August, when imports tend to be low, but overall it will generally bring in more fuel oil than it sends out.
"We believe that China will remain a net importer of fuel oil on an annual basis in years to come," he said.
Deutsch Bank AG predicted early this year that China's use of fuel oil would drop due to government efforts to reduce refineries' use of the fuel.
